Customer financing: Empowering Your Customers to Buy Now, Pay Later
Are you looking to boost your sales while offering your customers a more convenient shopping experience? Customer financing could be the solution you’ve been searching for. By providing this service, you allow your customers to make a purchase today and pay for it in the future. Gone are the days of waiting to save up or relying on credit cards. With customer financing, your customers can get the products they desire, and you can increase your revenue by selling more full-priced products and services.
The Basics of Customer Financing
Customer financing, also known as consumer financing, enables your customers to pay for goods, services, or products over time. Typically, a credit check is required as part of the application process to ensure that your customers are reliable borrowers. There are two ways to offer customer financing solutions: you can either do it yourself or use a third-party financing company.
Is Customer Financing Worth It?
As beneficial as customer financing can be, it’s essential to determine if it aligns with your business and customers’ needs. Several factors should influence your decision to offer financing as a service:
Do customers qualify?
Traditional lenders often work only with individuals who have a positive borrowing history. This criterion ensures that you can provide financing to reliable customers.
Is there a minimum spending requirement?
Certain platforms have high minimum order values, potentially starting at £1000. The specific lender will determine this requirement.
Will customers actually use the financing option?
Offering customer financing becomes futile if your customers show no interest in utilizing it. Assess their demand and preferences before implementing this service.
How much does it cost your customers?
By providing competitive rates for customer financing, you can attract more customers and keep them coming back for future purchases.
Choosing the Right Financing Option
When deciding the kind of financing to offer, you need to consider key criteria that align with your business goals and values:
- Implementation: Choose tools that are easy to set up and understand for both your customers and staff.
- Scalability: Ensure that customer financing extends to both your physical and online stores, maximizing your potential sales.
- Cost: While third-party financing companies charge a percentage of each transaction, offering in-house financing may initially impact your cash flow. Make a decision that suits your business needs.
- Risk: Any form of buy-now-pay-later service carries some risk, but in-house financing presents a higher level of risk for businesses.
- Flexibility: Verify that the customer financing platforms you consider do not impose unnecessary limitations on what can be financed.
Choosing a Financing Partner
If you decide that customer financing is an excellent fit for your business and prefer not to provide financing yourself, it’s time to select a suitable provider. Several popular options include:
PayPal
- PayPal Credit: Customers can pay for purchases without interest for up to six months.
- PayPal Pay in Four: Customers can make payments over four months without any interest.
- Compatible with BigCommerce, WooCommerce, and Magento.
Klarna
- Over 250,000 partners.
- Options to pay in four instalments with no interest, in 30 days, or over 6 to 36 months.
Afterpay
- Stores can receive loans without any interest.
- 90% of shoppers are approved for financing.
- The first payment is made at checkout, followed by three additional payments over the next six weeks.
iwocaPay
- No recourse to you if your customer can’t pay.
- Customizable payment options for trade customers.
- Instant funds in your account, regardless of the payment option your customers choose.
- Seamless integration with existing systems and software via plugins and custom API.
- Accept payments across all channels: ecommerce, invoices, and in-person.
Integrating and Promoting Financing Across Sales Channels
To maximize the benefits of customer financing, you must integrate it seamlessly into your sales channels and inform your customers about this offering. Consider the following steps:
- In-store POS: Allow customers to finance their purchases directly at your physical store.
- Online checkout: Add financing options to your checkout pages on your ecommerce platform.
- Product pages: Display both the list price and the financing rate on your product pages, helping customers assess affordability.
- Promotion: Use in-store signage, website banners, and social media posts to inform customers about your financing options. By doing so, you can attract potential buyers and differentiate your brand from competitors.
The Advantages of Customer Financing
By offering customer financing, you and your customers can enjoy various benefits:
- Increase order size: Businesses that offer customer financing experience a 15% boost in the average order size, resulting in more substantial revenues.
- Less hassle: Third-party financing options relieve you of the burden of tracking accounts and ensuring payment.
- More sales: Some customers may find the upfront cost of a product prohibitive. By providing financing options, you make purchases more manageable, increasing the likelihood of a sale.
In conclusion, customer financing provides an excellent opportunity to enhance your business and cater to your customers’ needs. Implementing this service can lead to increased sales, improved customer satisfaction, and a competitive edge in the market. So why wait? Embrace customer financing and empower your customers to buy now and pay later.